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$11,500 Profit on Our First Rehabbed House

by Thomas Hamilton   

We did it! After two appraisals and many phone calls, we are set to close on our first real estate investment. We purchased a bank REO (real estate owned) for $15,200 and sold it after a detailed remodel for $42,400.

We had the usual bumps and detours with this first project, but overall it was great! We did everything ourselves, except carpet installation, and new 200 amp installation. After all expenses, we will net around $11,500 for our efforts.

Creative Real Estate Online was a great help in reference and legal detail for us rookies. Thank you to all who answered our questions and thoughts. This was a great learning experience, and it was a success. We only owned the house for four months, so there was a seasoning issue from the mortgage company and or lender.

They were unsure of the validity of the deal, since we only paid $15,200 for the house and sold it for $42,400. They wanted to make sure it was worth what we were asking, and they ordered two appraisals, one at $43,000 and one for $50,000!

I don't think they really have any idea what needed to be done to put this place back together. I took "before and after" digital pictures of this place. I think this also helped us with the seasoning issue. I am going to pay off many bills and continue to look for my next deal. What have I learned from this one? Next one will be closer to home and will not have aluminum siding!

  • Paid for property: $15,186

  • Total refurb cost: $10,000

  • Paid closing cost for buyer: $2,600

  • Realtor commission $2,544

  • Taxes, deed, recording fees: $142

  • Total expense: $30,472

  • Net profit: $11,928

Yeah, you're right, but...no mortgage (cash), taxes $50 max, insurance $250. Still did okay on the first one, in my humble opinion. I learned more than money could ever buy. Darn, almost forgot utilities--maybe $300.

 
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